UK Project Management Roundup

As the euphoria of the summer of sport wanes, business in UK is getting back to normal. While there is plenty to discuss on the success of the Olympics and the role project, programme and portfolio management played, the major stories now concern procurement and related processes. Traditionally, Government procurement, especially in Defence, has been a focus for criticism even though it is rather like shooting fish in barrels. However the whole process of Government procurement has become the focus of serious concern. Beyond procurement troubles, there are also major problems facing the construction of new nuclear plants and the progress of a major merger is under threat. So this month the focus of this report is on the West Coast Mainline Franchise, new nuclear contracts and the BAE/EADS merger.

RAIL FRANCHISE BID PROBLEMS

Last month the results of the bidding battle between First Group, who run rail routes in the west of England, and Sir Richard Branson’s Virgin Group for the right to operate the lucrative West Coast Mainline franchise were announced. Predictably, Branson complained bitterly that the contest was not fair, citing what he saw as biases that led to significant advantages to First Group. In response, First Group stated that the bid conditions had been established 2 years ago and had not been challenged.

Just as the public was getting used to the idea of new operators running the franchise, the Transport Secretary has announced that the whole bid process is flawed and the contest will be re-run. Furthermore, the process cost bidders as much as £15 million each to contest and the Government will refund this to all bidders.

The franchise is for the right to operate the West Coast Mainline for 15 years. The duration of the franchise has been a bone of contention for years because there are powerful arguments for awarding longer term contracts, mainly so that any successful bidder has an incentive to invest significantly in rolling stock and other infrastructure needed to improve safety, reduce journey times and increase passenger carrying capacity.

However, long contract durations require accurate forecasting of passenger numbers and costs for the period in question. Most project managers know that all cost estimates require careful assessments of the underlying assumptions; in this case, bidders would need to make assumptions concerning the growth of passenger numbers and growth in passenger numbers of a significantly longer period than most financial models operate…

Miles Shepherd is an executive editorial advisor and international correspondent for PM World in the United Kingdom. He is also managing director for MS Projects Ltd, a consulting company supporting various UK Government agencies, nuclear industry organisations and other businesses. Miles has over 30 years’ experience on a variety of projects in UK, Eastern Europe and Russia. His PM experience includes defence, major IT projects, decommissioning of nuclear reactors, nuclear security, rail and business projects for the UK Government and EU. Past Chair and Fellow of the Association for Project Management (APM), Miles is also past president and chair of the International Project Management Association (IPMA). He is currently the Chair of the ISO committees that are developing new ISO 21500 Guidelines for Project Management and for Program/Portfolio Management. He was involved in setting up APM’s team developing guidelines for project management oversight and governance. Miles is based in Salisbury, England and can be contacted at [email protected].